NYC is the next Venture Capitol
This post is not about comparing Silicon Valley to NYC. That’s tired. Silicon Valley is the gold standard and there is no “next Silicon Valley.” What this post is about is how NYC has become a unique place to build multi billion-dollar startups. First, to frame the evaluation, it’s important to get the prevailing criticisms of the NY tech scene on the table:
- We lack talent, particularly technical resources.
- It is just too expensive to live and to build a startup in New York City.
- Seed rounds are easy to get funded in NY, but follow-on rounds are difficult.
- We’re deficient in terms of big exits and content to sell companies early.
- And finally, NYC is strong in traditional sectors like AdTech, FinTech, Fashion or Media, and nothing else.
While at one point there may have been truth to each of these points, they are simply no longer accurate. To address these topics in some detail, we’ve constructed the following graphic as a summary of the “state” of NYC’s startup ecosystem and why we conclude the city is on the rise as an important venture capital center: When you consider the growth of New York as a funding target for venture firms, it’s worth noting that the city has emerged as number 2 or 3 in the US – but more importantly, we’re the fastest growing region over the past decade for financings.
- More than $13.5B in venture financings in more than 2,700 transactions.
- More than 800 M&A transactions, including solid exits between $50M and $1B in the past two years. Notable companies include Admeld, Buddy Media, indeed, MakerBot, tumblr, among many others.
- Critically, we’re seeing the surge of very strong companies toward IPO in the $B+ range, such as AppNexus, mongdoDB and ZocDoc.
- NYC accounted for 7 or 9.3% of the total number of US VC-backed IPOs for 2013. Additionally, Shutterstock, the most the successful of 2013 NYC tech IPOs was not VC-backed, stands with a market cap of nearly $2.7b.
Sectors It is certainly true we have stars in what are considered NYC’s traditional sectors like Fashion and FinTech. But not as heralded are the world class companies emerging in more tech-heavy sectors such as Hardware and Enterprise Tech – not thought to be NY’s strength. Of note is that 27 of the Business Insider Digital 100 are NY companies.
- our community continues to demonstrate its special nature of support and collaboration, paying it forward to create new generations of founders,
- the focus of capital remains trained on our startups as a top three recipient of financings in the US, and
- most importantly, our terrific cohort of leading tech companies racing toward escape velocity, produces billion-dollar, thriving public companies.
** Many thanks to the inSITE Fellows Program and fellows Zak Schwarzman, Patrick Chang and David Lerman for helping to pull together data analysis for this article
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